Proposed Trans-Pacific Partnership (TPP)

November 19, 2014
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November 19, 2014
Proposed Trans-Pacific Partnership (TPP)
Overview
ability to regulate health, labor, and environmental
standards.
What is it? The TPP is a potential “comprehensive and
high-standard” free trade agreement (FTA) among 12
countries, most recently including Japan, which aims to
liberalize trade in goods and services and remove barriers to
foreign investment. The TPP negotiations cover a range of
trade topics and include 29 separate sections or “chapters.”
What is the current status? The negotiations remain
ongoing. TPP Ministers and Leaders met on the sidelines of
the recent APEC meetings in Beijing, November 7-11, but
no agreement was reached, despite President Obama’s
suggestion of such an outcome earlier in the summer. TPP
Leaders stated that finishing the negotiations is a top
priority and Trade Ministers reported that the pace of
negotiations has accelerated and outstanding issues are
limited, but include state-owned enterprises, environment,
intellectual property, and investment, as well as market
access talks with Japan, particularly on agriculture and
autos. There is no public text of an agreement available at
this time, but TPP Leaders released a broad outline of TPP
goals on the sidelines of the 2011 APEC forum meetings.
Country Participation
The TPP originated from FTA negotiations among Brunei,
Chile, New Zealand, and Singapore. The United States
joined in 2008 and membership has since expanded. Most
recently, Japan joined the negotiations in July 2013, during
the 18th round in Malaysia. This followed Japan’s official
request to participate and required the consent of the then11 TPP countries.
The United States is the largest country in the negotiations,
both in terms of population and gross domestic product
(GDP), with Japan second in both categories (Figure 1).
The United States has existing FTAs in place with six of the
other TPP countries, including Canada and Mexico. It does
not have an FTA with Brunei, Japan, Malaysia, New
Zealand, or Vietnam.
Figure 1. TPP Country Demographics
“... [a] common vision to establish a comprehensive,
next- generation regional agreement that liberalizes
trade and investment and addresses new and
traditional trade issues and 21st-century challenges.”
TPP Leaders Statement, November 2011
How would it differ from other U.S. FTAs? First, the
TPP would be the largest regional FTA ever negotiated by
the United States in terms of member countries and
encompassed trade flows. Second, the TPP includes
negotiations on new or expanded commitments on issues
such as state-owned enterprises, global value chains, data
flows, and discriminatory regulatory barriers. Third, TPP
partners envision a “living” agreement that could continue
to incorporate new members and address new trade issues.
What are supporting views? Supporters see an
opportunity for increased geopolitical and economic
engagement with the Asia-Pacific region, through both
establishing new rules and gaining increased market access.
They also cite the potential for increased economic and job
growth through greater trade liberalization.
What are opposing views? Opponents are concerned about
increased import competition from TPP countries in
specific sectors and potential negative employment impacts
in such sectors. They have also voiced concerns over
potential infringement on U.S. sovereignty including the
Source: IMF World Economic Outlook, 2014. Graphic created by
CRS.
Key Negotiating Issues
Market Access. TPP partners are seeking a comprehensive
market access agreement that reduces and eliminates tariff
and non-tariff barriers on all goods, including agriculture,
and services.
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Proposed Trans-Pacific Partnership (TPP)
Rules. The TPP partners also seek to establish disciplines
and rules governing international trade practices among the
parties, across a range of policy issues.
New and Horizontal Issues. TPP partners are negotiating
potential disciplines that go beyond those in existing U.S.
FTAs or negotiations at the World Trade Organization
(WTO). These new or expanded disciplines may cover
broad categories such as competition with state-owned
enterprises and regulatory coherence, as well as specific
issues such as data flows, where U.S. companies claim new
trade restrictions have emerged.
In addition, negotiators have flagged certain topics, such as
global supply chains, that relate to disciplines in multiple
chapters of the negotiations. They are reportedly
approaching each TPP chapter with consideration for how
its disciplines may affect these cross-cutting issues.
Services. As one of the most competitive sectors of the U.S.
economy, U.S. FTAs typically cover services through
greater market access and disciplines for trade in financial,
professional, e-commerce, telecommunications, and express
delivery services.
State-Owned Enterprises (SOEs). A new issue of focus in
the TPP, U.S.-proposed SOE disciplines seek to address
concerns expressed by U.S. companies of a competitive
disadvantage relative to state-backed foreign competitors.
Economic Significance
 The TPP would be the largest FTA by trade-flows,
though over 80% of U.S.-TPP trade is already covered
under existing U.S. FTAs.
 Total U.S. trade with TPP countries was more than $1.5
trillion in goods and $273 billion in services in 2013.
 The 11 TPP partners accounted for 37% of all U.S.
goods and services trade in 2013 (Figure 2).
Specific Issue Areas
Agriculture. Agriculture is an important component of U.S.
trade and is being addressed in TPP negotiations in terms of
market access in which the United States has both offensive
and defensive interests, as well as rules, such as sanitary
and phytosanitary standards (SPS).
More Information
Figure 2. Shares of 2013 U.S. Trade
Customs and Trade Facilitation. Access to foreign markets
depends on facilitating the movement of goods and services
across borders. The TPP includes negotiations on
disciplines that seek to address these issues.
Dispute Settlement. Provisions on dispute settlement
establish the mechanism by which FTA disciplines are
enforced. Not all disciplines of the TPP would necessarily
be enforceable and hence subject to these provisions.
Government Procurement. Government procurement
disciplines aim to ensure transparent, nondiscriminatory
treatment toward domestic and foreign firms when
government entities make purchasing decisions. Debate in
the TPP continues on the range of procurement to be
covered.
Intellectual Property Rights (IPR). Intellectual property
rights protect U.S. innovations in various forms. TPP
negotiations may address the strength of IPR protections in
areas such as trademarks, copyright, patents, trade secrets,
and others as they relate to traded goods and services.
Investment. In addition to goods and services, U.S. FTAs
also include provisions governing investment flows. A key
issue is the possible inclusion of an investor-state dispute
settlement (ISDS) mechanism.
Labor and Environment. Labor and environment provisions
attempt to address concerns over the protection of workers’
rights and the environment. Debate continues on their scope
and enforceability in the TPP.
Rules of Origin. Rules of origin determine how goods with
components from non-TPP countries are treated and will
affect the degree of market openness that is achieved.
Source: Analysis by CRS. Data from ITC and BEA.
Notes: TPP-9 refers to Australia, Brunei, Chile, Malaysia, New
Zealand, Peru, Singapore, and Vietnam; TPP-11 adds Canada and
Mexico; and TPP-12 adds Japan.
For more information see CRS Report R42694, The TransPacific Partnership Negotiations and Issues for Congress.
Also see CRS Report R42344, TPP Countries:
Comparative Trade and Economic Analysis; CRS Report
R42772, U.S. Textile Manufacturing and the TPP; and CRS
Report RL33743, Trade Promotion Authority (TPA) and the
Role of Congress in Trade Policy.
Brock Williams, bwilliams@crs.loc.gov, 7-1157
Ian Fergusson, ifergusson@crs.loc.gov, 7-4997
www.crs.gov | 7-5700
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